Nasdaq Index

The Nasdaq indices defined

Nasdaq-100 index and Nasdaq Composite index

The Nasdaq has several indices. The Nasdaq Composite includes all the stocks of companies listed on the exchange. When commentators in news media refer to "the Nasdaq," they usually mean the Nasdaq Composite. Additionally, there is the Nasdaq-100, which includes only the hundred largest non-financial company stocks. Plus, there are sub-indices for sectors such as biotechnology and stocks.

Nasdaq is also a price index

A price index means that dividend payments by companies are not included in the index calculation. To calculate the total return of Nasdaq, there is also a total return index that reinvests dividends.

Calculation of the Nasdaq index

Each stock in the index has a weighting factor, which is based on the company's market capitalisation. The larger the market capitalisation, the greater the company's influence on the index. The weighting factor and the price of all stocks is multiplied together calculated. The resulting number is divided by the index divisor to ensure that the Nasdaq index value is not excessively large.

Nasdaq index value:  ^{price x weighting factor}⁄_{Index Divisor}

Dot-com bubble

In the late 1990s, a wave of new internet companies went public in the United States. However, many of these companies were not yet profitable or generating revenue. Stock prices skyrocketed rapidly, and the Nasdaq broke record after record. When the dot-com bubble finally burst in the spring of 2000, the index plummeted nearly 80%. It took until 2015 for the Nasdaq to reach a new record high.

Women in Wallstreet

Adena Friedman (Chief Operating Officer) was promoted to the role of CEO in November 2016. She became one of the first women to run a major exchange in the United States. Her aims within her CEO position were to drive efficiency, further develop products, plus manage growth and expansion.

Buying Nasdaq stocks

There are several ways to invest in Nasdaq. You can purchase individual stocks listed on Nasdaq, such as Apple, Microsoft, Amazon and Google-parent Alphabet. A few other well-known companies listed on Nasdaq are electric car maker Tesla, chip producer NVIDIA and payments company PayPal.

If you want to invest in the entire Nasdaq or Nasdaq-100 at once, you can do so through options, futures or ETFs (exchange-traded funds). Most major ETF providers offer a fund that tracks the Nasdaq-100. Examples include iShares Nasdaq-100 UCITS ETF and Lyxor Nasdaq-100 UCITS ETF.